KUALA LUMPUR: Malaysian palm oil futures rose in Monday evening trade, recording a third session of gains in four on support from a weaker ringgit and steady crude oil prices.
Palm’s gains however will be capped by expectations of rising production, traders add.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange rose 0.3 percent to 2,192 ringgit ($540.57) a tonne at the end of the trading day.
Trading volume stood at 34,693 lots of 25 tonnes each at the close of trade.
“The market is slow today … But crude oil is higher and the ringgit is weak,” said a Kuala Lumpur-based futures trader.
Gains were likely to be limited “on looming concerns of high July production,” said a second trader.
Palm oil’s movements are affected by the ringgit, its currency of trade. A weaker ringgit usually makes the edible oil cheaper for holders of foreign currencies. The currency eased 0.1 percent around noon on Monday before reversing losses to rise 0.1 percent at 4.0550 against the dollar, but was still trading at more than six-month lows.
Meanwhile, rising production is expected to contribute to growing inventories and weigh on prices. Traders expect July output to rise in line with seasonal trends, also coming off a low production base in June.
In other related oils, the Chicago December soybean oil contract edged down 0.1 percent, while the September soybean oil contract on China’s Dalian Commodity Exchange rose 1.2 percent.
The Dalian September palm oil contract rose 0.5 percent.
Palm oil prices are influenced by the performance of other edible oils as they compete for a share in the global vegetable oils market.
Source: Brecorder
